Working paper 32 - Assessment of Kenya's Domestic Horticultural Production and Marketing Systems and Lessons for the Future

Author(s): Tschirley, David; Ayieko, Miltone

Introduction

Kenya, like nearly every country in the developing world, faces a dramatic shift in the balance between its urban and rural populations over the next two decades. This shift, the broad outlines of which are nearly unavoidable due to the nature of demographic change, hold major implications for a wide range of policy and investment decisions.

Decisions the country makes now, and actions it takes now and over the next two decades to meet these challenges, will have major impacts on its macro-economy, on the level and distribution of income growth in rural and urban areas, on rural-urban migration, and through these on the economic, social, and political dynamics of the country for many years to come.

Over the 25 year period to 2030, urban population in Kenya is expected to nearly triple, while rural populations will rise by only 50%.1. The urban share of population during that time will rise from 21% to 33%. Several implications follow. For one, farm productivity will need to increase dramatically. Today, 10 farming households have to feed about 2.5 non-farming households; in 25 years’ time, those same 10 farming households will have to feed about five non-farming households.

To achieve this, marketed food production per rural household will have to grow by nearly 3% per year, a major challenge even under the best of circumstances. A second implication of these demographic trends is that marketing infrastructure in urban areas, and that linking rural and urban areas, will have to be dramatically improved. Over the past two decades, this infrastructure has received very little investment and in many cases has deteriorated.

We will see in this report that urban marketing activities have, as a result, spread widely into unplanned – and unserviced – informal markets, with major negative effects for farmers, consumers, and urban residents. This undesirable situation is well recognized in Kenya’s Vision 2030 documents, which accord a high priority to improving food marketing infrastructure and rural-urban marketing links.

The purpose of this paper is to bring together a broad array of information that will be helpful in moving forward to refine and begin implementing food (and especially fresh produce) marketing investments under Vision 2030. Specific objectives include to:

• Quantify trends and patterns in fresh produce production in the country; • Quantify the role of fresh produce in urban consumer expenditure patterns and anticipate how these might change;

• Document the structure and elements of the performance of the fresh produce production and marketing system serving Nairobi, including (a) geographical origin of the produce, (b) how it flows to wholesale markets in the city and the market share of each of those markets, (c) how the produce flows from wholesale to retail markets and the market share of major retail markets, and (d) key behavior and performance indicators at retail level;

• Draw implications for policy and programmatic actions that need to be considered under the aegis of Vision 2030.

The paper quantifies the market share of both the “modern” (supermarket chains) and “traditional” (open air markets, kiosks, street vendors, and others) retail sectors, but then focuses on the “traditional” system, as it continues to carry the vast majority of fresh produce in the city and is frequented by the huge numbers of medium- and low income urban households (see Tschirley, Mutuku and Weber (2004) for a detailed review of market shares of different types of retail outlets). It is also the sector that would most directly benefit from increased public investment in market infrastructure.